Everything in life is a balance, including this... So yet again, you won't find a lot of disagreement from me on this.
People define things differently but Taleb was giving his 'view of the world' on Antifragile, what is risky and what is safe, convexity, etc. He could have given his own take instead of throwing a bomb and then going silent
He did. You mentioned it in your post...convexity. Things that have convexity have asymmetric payoffs. You should own things that are convex and I gave real life examples of that. What you are getting bogged down with is the concept of "safe". He uses T-bills generally to define safe. And they ARE safe. twelve month t-bills have no real inflation risk and people have been investing in them for generations. Yes even at 50 bps people bought them. Hell, people have bought money market rates at negative yields. Why? For SAFETY. So what part Daal are you having a hard time with?
In fact Daal, here is his EXACT strategy. He espoused buying 12 month zero coupon bills. And using the discount from those bills, buying option structures that involved being long tails in low vol environments. As Marty pointed out, the devil is in the details which can be said about anything in life.
Because he is read around the world and if he means US T-Bills only, then he needs to state that. What about the people that own government bills from countries that don't have as good track record? Are they out? Are they in? What does his readers in Bangladesh ought to do? Furthermore, I can link a youtube video where Taleb argues persuavely that samples in Extremistan data sets cannot be relied upon as the amount of data needed so one can be confidently of the 'mean' or 'average' is 10000 to the 10th power or some ridiculous number like that. Also, he lambasted Bernanke for ignoring tail/hyperinflation risks. I doubt very much Taleb had 90% of his cash in T-bills during that period
Daal, he DID state this. I have his book were he discussed this and I've watched all his interviews where he laid out the details just as I have. And can you inform me why someone in Bangladesh can't invest in US T-bills because I assure you they can. In fact, the irony here is they would have enjoyed a VERY nice return from dollar appreciation.
Taleb at his old fund actually had people managing selling ATM premium for him while he bought the wings. I think Spitznagel probably kept doing the same.
-Capital controls -Costs to access foreign assets (FX costs, legal costs, tax costs, etc) -FX risk (all of the sudden that 90% can fluctuatle widely). As a matter of fact, in my own country (Brazil) there was some periods where the dollar fell by 40-50% against the domestic currency, the one the investor buys groceries with (not the USD) Also, I would like to see the exact quote from the book where he stated that. With Taleb, if you dont read the fine print, he will call you an idiot later
What should an investor do when the real yield on a 12m t-bill is negative? I am reasonably sure there ain't no tails that you can afford to buy when this happens (has been the case consistently, more or less, for the past 10+ years).
I guess you blow your brains out Marty. What else is there to do in the binary world you want to live in. Just blow them out. What do you for a living Marty? Manage money? What happens when you have a 50% drawdown? Walk me through it.